How to Attract Private Equity for the Growth of Indian Retail Market and the Rationale: A Concept Paper
24 Pages Posted: 25 Mar 2012
Date Written: March 24, 2012
The 2nd fastest growing economy in the world, the 3rd largest economy in terms of GDP in the next 5 years, India tops A T Kearney's list of emerging markets for global retailers. India also tops the annual list of most attractive countries for international retail expansion, according to A.T. Kearney's Global Retail Development Index 2006. In this land of 15 million retailers, most of them owning small mom and pop outlets, we are likely to have no less than 100 million square feet of shopping centre space by 2007- 08, generating retail sales to the tune of over Rs.50,000 crore. Reliance Retail alone is taking about 3.5 to 5 million square feet of retail space by March 2007, for only one of its retail verticals.
A retailer has the option to venture the stock market through various channels. They can issue securities either through private placement, or through bought-out-deals or through public issue (IPO). Private Placement involves placing the securities with a limited number of institutional and high networth investors. It has fewer procedural formalities and provides faster access to funds. This paper’s focus is on the role of private equity in the growth of Indian retail market. This paper recommends certain marketing strategies that can be utilized by retailers searching for PE and PE funds searching for the right investment options. also describes the innovative strategy of DLF, Reliance Brands and Nahar Retail to use PE investment to boot the growth in retail business. Trend of PE investment in global retail market has been documented and it has been found that it is similar to that in Indian retail market, which concludes that private equity has a big role to play in growth of retail market.
Keywords: Private equity, Retail market, Investors, Retail financing
JEL Classification: L99, M31, F21
Suggested Citation: Suggested Citation